Please describe your proposed solution.
PURPOSE
Money transfer is a recurring need and transnational transfers involve conversion fees in addition to the transfer fees. These fees can amount to 10% of the transfer value and given that money sent through remittances are often for social purposes, this burden is borne by the most vulnerable populations. Blockchain is often offered as a solution, but this has not yet been fulfilled and the main reason is that most money transfer services leveraging blockchain remain centralized and rely on traditional services such as banks.
Ekival is designed to be a p-2-p decentralized money transfer service which offers an API service for other applications to publish available liquidity by location.
Liquidity providers come in two main categories: those who seek a service and those who seek a rent.
Liquidity providers who seek service are those who use cryptocurrencies in their business. For instance, a business located in Nigeria may accept Bitcoin in exchange for cash in Nigeria in order to pay for goods in Asia where payment in cryptocurrencies is faster and more secure. From our surveys, another popular case is linked to the risk of holding large amounts of cash at certain locations. Transfering the cash to a financial institution can be risky and lengthy due to inefficient financial services.
Liquidity providers who seek rent are those who expect to gain from the exchange of the fiat currency at their disposal into cryto currencies. Mobile money operators constitute the main type of such stakeholders within Ekival. On average, these providers of liquidity seek a rent of around 3% and this is within the operating margin of Ekival.
Ekival seeks to publish available liquidity in the form of either cash or mobile money transfer. Through our smart contract, liquidity providers and consumers respectively send a deposit and the total value while the validation process relies on their (or their agents') interaction or mobile money API confirmations.
Ekival is a value transfer application, but our first implementation is money.
To send money using Ekival, users "lock" liquidity and provide a beneficiary (themselves or a loved one) whose mobile money account will be tracked to receive the expected amount and transaction code. In-person exchange is validated by scanning a QR code.
In the case of remittances powered by the Cardano Blockchain, transfer fees will be relatively low compared to traditional transfer services. Ekival aims to provide a competitive alternative while maintaining a vision to be profitable. Currently, the Testnet implementation accounts for a 2 Ada fee per transaction.
The Cardano ecosystem benefits from a solution such as Ekival as sending Ada to an African beneficiary is still relatively not attractive due to the lack of exchanges. As supporters of Cardano, we facilitate Africa-based projects funded through Catalyst that do not have means to exchange Ada for fiat and we have helped provide liquidity of over $50,000 so far.
Also, transaction fees also affect Africa-based projects and Ekival seeks to automate the process as there are relatively large amount of fiat currencies which can be locally exchanged if the information is available for both providers and consumers.
Please describe how your proposed solution will address the Challenge that you have submitted it in.
Remittance fees are of particular concern for the African continent where an average fee of 8.2% of the transfer amount is charged for transfer to Sub-Saharan Africa. Intra-region transfers in Africa are even more expensive with fees amounting to more than 15% of the transfer value (Global Remittance Flows in 2021, KNOMAD & World Bank, 2021).
Globally, remittance fees constitute a burden on the most vulnerable and limit investments in developing nations. And these estimates do not take into account associated costs linked with retrieving remittances (transport, identification documents, missed labor, etc.).
What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?
Risk 1: Low crypto adoption in DRC
Solution 1: Mobile money integration will reduce the need for users to sign blockchain transactions. By validating the completion of the transfer via mobile money transfer confirmations, Ekival allows beneficiaries (consumers of liquidity) to use familiar financial services while crypto adoption grows.
Risk 2: Legal considerations of peer-to-peer (P-2-P) transactions in certain countries
Solution 2: By offering a decentralized application, we allow users to opt-in according to the relevant laws.
Stablecoin availability (Coinmarketcap)